Faced with a liquidity crunch, the country's second largest private steel producer, JSW Steel, is cutting its proposed investment by nearly one-third for the first phase of the Rs 35,000-crore mega steel project in West Bengal.
In November last year, the company had laid the foundation stone for the 10-MTPA greenfield steel project at Salboni in the state and said that the first phase with three million tonne capacity would come up at a cost of Rs 10,000-12,000 crore.
"The total cost of the first phase of the project now stands at Rs 4,000 crore, of which Rs 2,700 crore will be in the form of debt," JSW Group CFO Seshagiri Rao told PTI.
The company, which is anticipating lower profit in the third quarter of the present fiscal, was finding it tough to attain financial closure for its greenfield expansion projects due to liquidity crunch amid the economic slowdown.
"We have approached banks and expect to secure finances for the first phase of Bengal project by the end of this quarter. We have not attained financial closure yet," he said.
In the first phase of the West Bengal project, the company would set up a beneficiation unit to refine iron ore, a pellet plant and develop captive coal and iron ore blocks allocated to the firm.
The steel major had planned to produce 32 million tonnes of steel by 2020, with an investment of Rs 10,00,000 crore, which according to the industry observers could be a tough task.
"The company is likely to commission 10-MTPA by 2020 now instead of the targeted time-frame of 2012," an analyst said.
Apart from putting up a plant in West Bengal, the company has plans to set up a mega greenfield steel plant in Jharkhand and increasing the Vijaynagar plant capacity to 10 million tonnes per annum in the next few years.